Ecuador remains hopeful that foreign investment in groundbreaking ‘carbon bonds’ will save a tract of its Amazonian rainforest and prevent millions of tonnes of fossil-fuel greenhouse emissions.
The first financial commitment is anticipated from Germany by the end of 2009 in the Yasuni-ITT Initiative, which the Ecuadorian government wants to be the prototype for a new carbon market mechanism to preserve tropical rainforest across the developing world.
For two years, the government of Rafael Correa has been looking for international financial support for the concept that would see bonds issued over a government guarantee that oil won’t be extracted from the Yasuni National Park and its forest and biodiversity preserved.
Revenue from bond sales would offset the royalties foregone to oil companies currently looking to exploit the fossil-fuel resource. The initiative would lock up the reserve permanently and deliver 407 million tonnes of emissions reduction savings from the avoided extraction and burning of 850 million barrels of oil.
An extra 820 million tonnes of savings could be realised over 30 years from avoided deforestation and increased renewable energy capacity financed by the bonds, according to analysis by consultants Silvestrum.
The Ecuadorian government envisages issuing Yasuni Guarantee Certificates linked to the price of offset credits on the European carbon market. Standard carbon offset credits for the emission reductions can’t be pursued, the World Resources Institute says, because such an ‘avoided extraction’ project is not eligible under schemes like the UN Clean Development Mechanism (
CDM).
Yolanda Kakabadse, president of WWF International, former Ecuadorian environment minister and a member of the commission spearheading the Yasuni-ITT initiative, has confirmed by email that the government is seeking carbon bond income of at least 50 per cent of the expected $7.2 billion oil revenues over 13 years to make the plan viable.
She said Germany is considering a contribution of $50 million a year and the Ecuadorian government is hoping for an official commitment before the end of 2009. Other developed nations would need to come on board to raise the minimum $3.6 billion required.
In response to Carbon Positive’s
earlier story on the Yasuni Initiative, Kakabadse says the government would not consider allowing some drilling in the reserve if only partial bond sales were possible. She also clarified the financial safeguards for investors over any future reversal of the ban on oil drilling in Yasuni.
“If we don't keep our commitment, preferential shares (‘acciones preferenciales’) invested in sustainable energy projects would be handed over to the donors, who from that moment would receive interest on these investments,” Ms Kakabadse said.
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Ecuador wants 'carbon bonds' to save forestMore:
Yasuni ITT website [Español]
Yasuni ITT summary [English - PDF download]